Legal Briefing

TMT | 01 April 2013

It’s six in the morning and the Mysore ‘self practice’ yoga class at Triyoga in London’s fashionable King’s Road is filling up. I am already in place, concentrating on my sun salutations. Well, that’s what I should be concentrating on. In fact, I’m concentrating on the fact that nearly everyone entering the room is wearing more or less the same yoga gear. The styles vary, but they are distinctive, some with a colourful waistband, all with a discrete ‘A’ logo at the back. This is Lululemon.

The hardcore yogis who show up daily at the crack of dawn at the Mysore class are not there to make a fashion statement. There are no mirrors in the class. No-one is going to be impressed by what you wear or how you look. You simply wear and do what works best for your practice. At least that’s how it should be. But that morning I started thinking. I’ve been involved with the fashion industry in one way or another for years – for several years as a model, exciting in its way; then for many more years as an IP lawyer, exciting in a different way. Not surprisingly, these days I’m rarely excited by a fashion brand. I was asking myself what it was about Lululemon that had made me go out and buy five of everything in different colours, when for more than five years I hadn’t bought new yoga gear of any sort.

The irony of a ‘cool’ brand being associated with the ancient Indian physical and spiritual discipline of yoga, so far removed from the world of commerce, didn’t escape me – or the fact that in the broader scheme of things fashion brands, ‘cool’ or otherwise, have very little significance. But old habits die hard, and I was curious. I had, almost unwittingly, become one of Lululemon’s greatest supporters. What did that say about the brand? What lessons might there be here for other brands? What makes a brand ‘cool’? How does it stay that way? What could I learn from Lululemon and what advice might I be able to give to it? First, I needed to find out more about the Lululemon story.

I should say at this point that my firm does not act for Lululemon, nor do I have any inside information or vested interest. I speak only as an enthusiastic, some might say extravagant, customer; and an interested professional.

THE LULULEMON STORY

Corporations may dominate the financial world, but it’s the people behind them who have the passion to get them started and the ideas to keep them going. Look behind many of the world’s most famous brands and you’ll find an inspiring and committed individual: think of Steve Jobs and Apple, Coco Chanel and Chanel, and Giorgio Armani and the Armani brand.

Lululemon seems to fit the mould. Chip Wilson, the man who started the company in Vancouver in 1998, has been described as a ‘surfer dude turned billionaire’. In 1997 he sold his interest in surf and skater gear manufacturer Westbeach Sports for $1m. Then one day, with money in his pocket, time on his hands, and a passion for physical activity, he decided to attend a yoga class – in fact, it was the first commercial yoga class to be held in Vancouver. He very soon found he was experiencing the feeling he used to get surfing and snowboarding – but here was a form of exercise that wasn’t only for the young. It was something that could be practised at any age. He was hooked. Then, with the true eye of the entrepreneur, he saw an opportunity. The cotton clothing that was being worn by everyone in the class seemed to him to be distinctly unsuitable – he would combine his new-found passion for yoga with his passion for the technical athletic fabrics he had used in his previous business.

And so Lululemon was born. First, a design studio was established, with the space serving as a yoga studio at night to pay the rent. Yoga instructors were asked to wear the clothing that was being designed, and to provide their insights and feedback in relation to it. On the basis of that feedback, a range of clothing was developed. A list of 20 possible brand names and 20 logos was then produced and 100 people were surveyed. The result was the selection of the ‘Lululemon’ name and the stylised ‘A’ logo. The letter ‘A’ was the first letter of one of the names that didn’t make the grade, but said a lot about the clothing: ‘Athletically Hip’.

In 1998, in a seaside neighbourhood in Vancouver, the first store was opened with design studio, retail space and shared yoga studio. In 2007, the company went public; now it has more than 200 stores and outlets in North America and elsewhere, and annual revenue in excess of $1bn. The brand is going from strength to strength.

But it certainly hasn’t been plain sailing all the way. There have been a number of serious threats to the brand – a reminder, perhaps, that the drive and passion that lie behind great brands often come with risk attached. Also that some of the greatest successes have had failures along the way.

First, there were the Lululemon shopping bags with the slogan, ‘Who is John Galt?’. Well, he was, it seems, the central character in Atlas Shrugged, a novel by a Russian-American, Ayn Rand – a novel that Chip Wilson says inspired him as an 18 year old. The problem with the slogan was that the central message of the book seems to have been this: if we all pursue self-interest the world will be a better place. Not a message consistent with yoga philosophy. Lululemon customers were outraged. A company blog subsequently justified the choice of slogan by explaining that the focus of the book is not, in fact, the glorification of self-interest, but the need to overcome mediocrity: the bag is a visual reminder to focus on rising above mediocrity – on living rather than existing. Still, some damage had been done. As it was when the inspirational messages on the company’s iconic re-usable shopping bags, messages such as ‘Friends are more important than money’, were found to have been stitched over the much more controversial messages that Lululemon had originally chosen.

Then there were Chip Wilson’s comments in favour of child labour, and a controversy over the claimed seaweed content of Lululemon’s Vitasea fabric, and its health effect. And litigation involving allegations that the company was forcing employees to watch Landmark motivational videos at home, and to attend Landmark classes, without compensation.

Another embarrassment was an advertisement the company placed in Yoga Journal. It featured a fake newspaper article about China showing adults dressed in nappies, with bonnets and dummies, sitting at sewing machines, and a post-it note from Chip asking ‘How did this get out?’.Lululemon was not using child labour – the advertisement was intended to be ironic and humorous; but, not surprisingly, it backfired.

Kerri McKenzie, subsequently hired by the company as production manager responsible for overseas operations, has been quoted as saying that Chip is often ‘misunderstood’ and can be ‘frustrating’ to work with – something that may well be true of the creators of most great brands.

WHAT MAKES A ‘COOL’ BRAND?

The words ‘brand’, ‘brand name’ and ‘trade mark’ are often used interchangeably. Under the Trade Marks Act 1994 any sign which can be represented graphically and which is capable of distinguishing the goods or services of one undertaking from those of another is prima facie registrable as a trade mark, subject to the absolute and relative grounds for refusal. There are similar definitions for the word ‘trade mark’ in national and regional legislation around the world. There is no equivalent for the word ‘brand’. The British Brands Group says this:

‘There is no single, universally accepted definition of a brand. The Westminster Business School, when studying the contribution of brands to the UK economy, defined it as:

“… a reputational asset which has been developed over time so as to embrace a set of values and attributes, resulting in a powerfully held set of beliefs by the consumer and a range of other stakeholders.”

A consumer’s trust in a product or service has to be earned, by meeting a need consistently and better than alternatives. Such trust inspires loyalty, together forming “a reputational asset” for companies.’

Many of the world’s successful fashion brands, appearing on lists such as Interbrand’s Best Global Brands, fall within this description. But not all of them are what I would describe as ‘cool’ brands. For obvious reasons, my day job prevents me from naming here the ones I think are not ‘cool’. Readers will no doubt have their own examples.

So, how do we define a ‘cool’ brand? Coolbrands UK, which produces a list of Britain’s coolest brands, people and places, has come up with six criteria which voters are asked to bear in mind when voting for a cool brand:

What is ‘cool’ is, of course, to some extent subjective. A seemingly essential component, however, is that there will be an absolute passion and a very clear focus behind the brand, a passion and focus that informs not only the design of the product itself, or the brand in the narrow trade mark sense, but every aspect of the business. A ‘cool’ brand is an inextricable part of the business, supported by the rest of the business and in turn supporting the business. In a sense every aspect of the business becomes part of the brand: the philosophy of the business, the design of the shops, websites, advertising, literature, methods of communication, staff and employees. An obvious example is Apple, probably still one of the ‘coolest’ brands in the world. Somehow, the Apple brand still manages to capture the essence of the exciting, unstoppable force that was Steve Jobs.

Closely linked to this is perhaps the key feature of a ‘cool’ brand: quality and consistency. The strength of a brand is intimately connected with the quality of the product in relation to which it is used. The quality of the product, in fact, becomes part of the brand. I may have initially been attracted to the Lululemon product because of the way it looked, but what made me a devotee of the brand was the particular quality of the product. The designs and the fabric are comfortable, more comfortable than any others I have worn; and the products are flattering, more flattering than any others I have worn. It was not until I tried the clothes on, and began to practise in them, that I was hooked. Only at that point did I decide that Lululemon was an extremely ‘cool’ brand and that if I was going to spend money on new yoga gear, I was going to spend it on Lululemon gear. For me, the Lululemon brand is a guarantee of a particular style and a particular quality.

KEEPING A ‘COOL’ BRAND ‘COOL’

Although what is ‘cool’ in the fashion world is almost by definition short-lived, brands can remain ‘cool’ by remaining true to their brand values. Developments in style and product, as well as other features of the brand, will be inevitable – a ‘cool’ brand will never be static. But its ‘coolness’ will be maintained only if the brand culture within the organisation is sufficiently strong and consistent.

If a brand such as Lululemon is seen as a guarantee of a particular style and quality, a key element in maintaining the brand’s distinctiveness will be maintaining that particular style and quality. This may sound obvious, simple enough, but it’s the very thing that companies most often get wrong. And the reason they get it wrong is that it’s not at all easy to get it right. It requires, first, a very strong sense of what the brand stands for, and a strong commitment to the brand. That is something that doesn’t always exist. It’s not enough for the marketers or lawyers to have this understanding. It must exist at the highest levels of management and it must be clearly articulated and communicated to all staff. The brand values must become part of the fabric of the company, part of its language.

To achieve this, it is important to have easy-to-follow brand manuals and regular training sessions, and a system that involves employees in the brand, encouraging them to communicate their ideas and notify the company when they become aware of any potential infringements.

It will, of course, be important to obtain the appropriate IP protection, although anyone working in the fashion industry will be well aware of its limitations. It is important to obtain appropriate registered rights, which may include trade mark, design and patent (if appropriate) registration, in all relevant jurisdictions. This is something that will usually be worked out with the company’s lawyers and patent and trade mark attorneys.

The real value of an IP portfolio will, however, be determined by the use that is made of it. In my experience, companies often find it easy enough to decide what, and where, to register, but have difficulty developing and implementing an appropriate enforcement strategy. It’s necessary, for effective brand maintenance, to be able to deal as promptly, consistently and cost effectively as possible, with potential infringements. An enforcement strategy should, therefore, determine which type of potential infringement will be tolerated, which will not, and what sort of action will be taken in relation to each. Having such a strategy in place will enable action to be taken promptly and efficiently. As a bonus, a brand owner who develops a reputation for looking after its brand is likely, over a period of time, to have fewer infringement problems to deal with.

I don’t know how proactive Lululemon is in defending its brand, but I see that it recently took action in the US against Calvin Klein for infringement of three US design patents relating to various design features, including the waistband , of its Astro Pant. Although the action was settled on a confidential basis, and the basis of settlement is, therefore, not known, it will stand as a warning to potential infringers that Lululemon is prepared to act to enforce its rights.

Perhaps one of the biggest challenges for Lululemon will be staying sufficiently small to retain control of the brand ie to ensure that it retains the special appeal that it has at the moment. The company has always been a vertically integrated retailer, which means that it has control over everything from manufacture to buyer experience. This makes it relatively easy to control the brand. Lululemon’s community relations director, Eric Petersen, says the company intends to stay small: ‘You’ll never see Lululemon stores everywhere. We have no interest in being a thousand-store chain’. It is much more difficult for brands belonging to large companies to retain the kind of cachet that Lululemon currently has. Despite Petersen’s reassuring words, it remains to be seen how long the brand’s ‘cool’ image can be retained now that the company has gone public.

Finally, it is important not to be afraid to make a mistake. Whenever you push the limits, create something new, do something exciting, something ‘cool’, there will always be the risk that you will make a mistake. Richard Branson is a classic example – so is Lululemon. There are, however, very few mistakes that can’t be fixed. It’s not so much making a mistake that counts, it’s what you do about it.

CONCLUSION

Lululemon is still a young brand. Its possibilities are still intact. Whether it is a flash in the pan, another of the ‘cool’ brands on everyone’s shopping list for a few years and then forgotten, or a brand that endures, remains to be seen. It has the quality to endure, certainly; whether it is able to do so is another matter. I was interested to see that last year Chip Wilson stepped down as chief innovation and brand officer, though he remains chairman of the board and the largest individual shareholder. Maybe this is a good omen: a sign that the company is willing and able to learn from its mistakes. Or maybe it’s simply that now that he’s a billionaire Chip has decided he doesn’t need the hassle any more.

In any event, there my reflections on Lululemon ended. It was time for me to move on to the supta kumasana (reverse tortoise pose) – wearing my Lululemon, naturally.